17 Aug Louisiana, Maryland and Massachusetts Legislative Update
The Louisiana legislature recently enacted legislation authorizing municipalities to enact ordinances relative to abandoned property. The Maryland legislature recently enacted laws requiring the Department of Labor, Licensing, and Regulation (the “Department”) to establish a Foreclosed Property Registry (the “Registry”) and a Foreclosed Property Registry Fund (the “Fund”). The Massachusetts legislature recently amended its laws to prevent unlawful and unnecessary foreclosures.
LOUISIANA SENATE BILL 752 (effective October 1, 2012)
If a lender or loan servicer receives a notice from a governing authority identifying certain maintenance required on the mortgaged property, the lender and loan servicer will have the right to directly or through third parties enter onto the property to perform maintenance. If any abandoned residential property affected by a mortgage is unoccupied or abandoned, the lender and loan servicer will each have the legal right, directly or through third parties, to enter onto the property and to perform maintenance to protect and preserve the property until it can be sold at private sale or sheriff’s sale.
The lender, loan servicer, and any third parties hired by them to perform maintenance on the property will not be liable to the borrower or the owner of the seized property or any other person for any financial or pecuniary loss or damage claimed to have been suffered by the borrower or owner of the property or any other person by reason of the maintenance of the property. Any costs and expenses incurred by the lender or loan servicer for maintaining the property may be added to any loan balance secured by the mortgage and recoverable from proceeds received from a sale of the property.
The governing authority of any parish with a population between 400,000 and 440,000 based on the latest federal decennial census, and any governing authority of a municipality that lies within such a parish, may enact ordinances requiring that abandoned residential property be maintained in safe and sanitary condition to maintain the stability of the neighborhood.
“Abandoned residential property” means a 1-to-4 family residential property that is vacant as the result of the relinquishment of physical possession or control by a homeowner or any other person or entity. Property may be deemed abandoned when there is evidence of conditions, taken separately or as a whole, that would lead a reasonable person to conclude that the property was unoccupied, including but not limited to evidence of vacancy.
“Evidence of vacancy” means a condition that on its own, or combined with other conditions present, would lead a reasonable person to believe that the property is vacant. Such conditions include, but are not limited to, the following:
· Overgrown or dead vegetation;
· Accumulation of newspapers, circulars, flyers, or mail;
· Past due utility notices or disconnected utilities;
· Accumulations of trash, junk, or debris;
· The absence of window coverings, such as curtains, blinds, or shutters;
· The absence of furnishings or personal items consistent with residential habitation; and
· Statements by neighbors, passersby, delivery agents, or government employees that the property is unoccupied.
“Maintenance” means, but is not limited to, the following:
- Repairing or replacing broken glass windows;
- Repairing or replacing exterior doors;
- Replacing soffit, fascia, shutters, and siding;
- Repairing or replacing fences; and
- Maintaining or covering swimming pools and hot tubs.
“Owner” means any person with care, custody, or control of the property at issue, including, but not limited to, record owners, seizing creditor, mortgage holders, lien holders, or loan servicers of foreclosed property pending title transfer, or an agent or assignee of the seizing creditor, mortgage holders, lien holders, or loan servicer.
“Notice” means posting notice of the alleged violation on the door of the property at issue and sending notice via certified mail, return receipt requested, from the governing authority addressed to the property owner, referencing the subject providing an explanation of the maintenance needed on the property, specifying the time period in which the work is required to be completed, providing the name and phone number of a contact person with the governing authority who has knowledge of the matter who can provide more information, including a copy of the applicable ordinance, and including a photo of the subject property. If the property is encumbered by a recorded mortgage, then a notice letter will be sent certified mail, return receipt requested, from the governing authority addressed to the seizing creditor, mortgage holder, lien holder, or loan servicer of foreclosed property pending title transfer that includes all of the information and enclosures required to be provided in the letter to the owner.
Work will not be undertaken by the governing authority until the owner of the property has been given notice and a minimum of 45 days to perform the maintenance. A governing authority may undertake the maintenance of the property if the requirements of notice and time delay have been met and the maintenance has not been performed.
The governing authority will take a photograph showing the condition of the property before the maintenance is performed and will take a photograph showing the condition of the property after the maintenance is performed. The governing authority will keep records showing the expenses incurred in maintaining the property, and those will be retained for a period of 5 years or until the property is sold, whichever time is less.
The governing authority will use licensed and insured vendors to perform maintenance on property.
After completion of the maintenance on the subject property, the governing authority will record in the public mortgage records in the parish where the property is located, an affidavit, signed by either the chief elected official or his or her designee or by the parish or city attorney or his or her designee. The required affidavit will include the following:
- A legal description of the property to which maintenance was performed, sufficient to reasonably identify it.
- The name of the property owner.
- A description of the maintenance performed and an itemization of the amounts of money spent on maintenance.
- The name of the governing authority and a statement that the provisions of this law and the provisions of the applicable local ordinance have been complied with.
The governing authority will have a privilege against the subject property for the cost of maintenance it incurs, as documented in the recorded affidavit, and the privilege will have the ranking priority as to other mortgages and privileges.
The costs of maintenance, including charges, costs, and expenses incurred by the governing authority in enforcing such ordinances enacted pursuant to the above provisions will be the actual cost to the governing authority, not to exceed a total of $5,000 in a 12-month period.
A property owner and mortgage holder will have the right to dispute a privilege created against a mortgaged property, if the work creating a privilege was not performed on the property. A privilege may be disputed by submitting an affidavit to the governing authority. The affidavit must be made by someone with knowledge of the condition of the property, providing a statement that work giving rise to the lien was not performed on the subject property, and giving an explanation as to why it believes the work was not performed on the property. Additional documentation may be submitted with the affidavit, such as pictures of the identity and condition of the property, and invoices or records showing that work was performed privately. Upon receiving the affidavit and other documentation, the governing authority will have 30 days to investigate the dispute and respond by either producing pictures or records to prove that the privilege established on the property for work performed is accurate, or by issuing a written release and cancellation of the privilege.
MARYLAND HOUSE BILL 1373 (effective October 1, 2012)
“Foreclosure purchaser” means the person identified as the purchaser on the report of sale for a foreclosure sale of residential property.
“Local jurisdiction” means a county or a municipal corporation.
“Residential property” means real property improved by four or fewer dwelling units that are designed principally and are intended for human habitation.
The Department will establish and maintain an internet-based Registry for information relating to foreclosure sales of residential property.
At the time of a foreclosure sale of residential property, the person responsible for conducting the foreclosure must obtain from the foreclosure purchaser a written acknowledgment of the Registry requirements.
Within 30 days after a foreclosure sale of residential property, a foreclosure purchaser must submit an initial registration to the Registry. The initial registration must be in the form the Department requires and contain the following information:
- The name, telephone number, and address of the foreclosure purchaser;
- The street address of the property that is the subject of the foreclosure sale;
- The date of the foreclosure sale;
- Whether the property is a single-family or multifamily property;
- The name and address of the person, including a substitute purchaser, who is authorized to accept legal service for the foreclosure purchaser;
- To the best of the foreclosure purchaser’s knowledge at the time of registration:
- Whether the residential property is vacant; and
- The name, telephone number, and street address of the person who is responsible for the maintenance of the property; and
- Whether the foreclosure purchaser has possession of the property.
Within 30 days after a deed transferring title to the residential property has been recorded, the foreclosure purchaser must submit a final registration to the Registry. The final registration must be in the form the Department requires and contain the following information as of the date of final registration:
- The name, telephone number, and address of the owner on the deed;
- The date of the ratification of the sale; and
- The date the deed was recorded.
The filing fees for registering a residential property are $50 for an initial registration filed within the required time period and $100 for a late initial registration. There is no fee for a final registration. Filing fees are nonrefundable.
A local jurisdiction may enact a local law that imposes a civil penalty for failure to register in an amount not exceeding $1,000. A local jurisdiction that, in accordance with any applicable building code or local ordinance, terminates a nuisance on a registered residential property may collect the cost associated with the termination of the nuisance or other action as a charge included on the residential property’s property tax bill.
The cost associated with the termination of the nuisance or registering real property may not be included as a charge on the residential property’s property tax bill unless the local jurisdiction provides advance written notice of the intended termination of the nuisance to the person identified in the Registry who is authorized to accept legal service for the foreclosure purchaser and the person identified in the Registry who is responsible for the maintenance of the property.
This notice must describe the intended termination of the nuisance or other action the local jurisdiction intends to take and be provided in accordance with the notice provisions of applicable building codes or local ordinances. If the applicable building code or local ordinance does not provide for notice, the notice must be provided at least 30 days before the local jurisdiction terminates the nuisance or takes action to maintain the property.
The Registry is not a public record as defined by the Maryland State Government Code and is not subject to its record requirements.
The Department may authorize access to the Registry only to local jurisdictions, their agencies, representatives, and Maryland agencies.
The Department or a local jurisdiction may provide information for a specific property in the Registry to a person who owns property on the same block or a homeowners association or condominium in which the property is located.
Revenue collected from the filing fees will be distributed to the Fund, which is administered by the Department. The purpose of the Fund is to support the development, administration, and maintenance of the Registry. The Fund is a special, nonlapsing fund that is not subject to reversion back to Maryland at the end of a fiscal year. The State Treasurer will hold the Fund separately, and the Comptroller will account for the Fund. The Fund consists of:
- Revenue distributed to the Fund from filing fees;
- Investment earnings of the Fund;
- Money appropriated in the Maryland budget to the Fund; and
- Any other money from any other source accepted for benefiting the Fund.
The State Treasurer will invest the money of the Fund in the same manner as other Maryland money may be invested. Any investment earnings of the Fund will be paid into the Fund.
Only the Maryland legislature may enact a law requiring a notice to be filed with a unit of government to register residential properties that are subject to foreclosure. This does not restrict or otherwise affect the ability of a unit of government to require a registration or notice to be filed for a purpose other than one relating to foreclosure, even if a property to be identified in the registration or notice is subject to foreclosure.
On or before January 1, 2013, the Department will report to the General Assembly the status of the Registry and the Fund, including the number of properties registered, the cost of maintaining the Registry, the Fund balance, whether the registration fees need to be altered to reflect the costs of maintaining the Registry, and the Department’s assessment of the effectiveness of the Registry.
MASSACHUSETTS HOUSE BILL 4323 (effective August 3, 2012)
The following provisions were effective August 3, 2012. We will later report on the provisions that are effective November 1, 2012.
The legislature has established a task force of 13 members, which must consist of:
- A representative of the Massachusetts Bankers Association;
- The Attorney General, or a designee, who will serve as chair of the task force;
- Two chairs of the Joint Committee on Housing;
- Two chairs of the Joint Committee on Financial Services;
- Two chairs of the Joint Committee on the Judiciary;
- An appointee by the minority leader of the House of Representatives;
- An appointee by the minority leader of the Senate; and
- Three appointees by the governor, two of whom must be representatives of a legal organization which represents consumers or homeowners in the Commonwealth.
The task force will study ways that the Commonwealth can encourage the prevention of unnecessary vacancies following foreclosures. This includes, but is not limited to, the feasibility of allowing a foreclosed homeowner to continue to occupy the foreclosed property, in whole or in part, until a binding purchase and sale agreement has been executed with a purchaser who intends to occupy the housing accommodation as the purchaser’s primary residence and who is not a foreclosing owner. The task force will study the feasibility in which these situations would be subject to landlord-tenant law in the Commonwealth and where the foreclosure sale purchaser may initiate eviction proceedings against the foreclosed homeowner in possession of the property.
The task force will also conduct a comprehensive review and evaluation of the existing mediation programs throughout the United States. The evaluation made by the task force will include, but is not limited to:
- The varying models of mediation programs and their effectiveness;
- The percentage of borrowers utilizing mediation, the percentage that remain in their homes after mediation, and the percentage who re-default;
- The costs and procedures necessary for implementing and maintaining a state mediation program;
- Funding sources for a state mediation program;
- Potential entities to oversee the state mediation program;
- Potential credit and borrowing obstacles in jurisdictions with mediation programs; and
- The feasibility for the judiciary to be involved in the mediation process.
The task force must submit its findings and recommendations to the clerks of the House of Representatives and Senate, the Joint Committee on Financial Services, the Joint Committee on Housing and the Joint Committee on the Judiciary by December 31, 2013.
The Massachusetts Division of Banks must adopt, amend or repeal regulations to aid in the administration and enforcement of the laws regarding unlawful and unnecessary foreclosures, including the minimum requirements of a good faith effort by the borrower to respond to the notice of the borrower’s right to pursue a modified mortgage loan. The regulations may include additional requirements for reasonable steps and good faith efforts of the lender to avoid foreclosure and safe harbors for compliance.
If a lender has sent the right to cure notice after August 3, 2012, the lender must send the notice of the borrower’s rights to pursue a modified mortgage loan if the borrower would otherwise qualify for the notice.